The Party's Over

The following is commentary that originally appeared at Treasure
Chests for the benefit of subscribers on Monday, September 25,
2016.

The party's over for the neo-liberal deep state, more commonly referred to
as the 'status quo', and we will all pay a heavy price in the aftermath. Because
all the money printing in the world will no
longer work. Sure, the printing presses will continue to spit out ever-increasing
fiat currency digits in order to maintain the illusion for as long as they
can, however as with all deceptions, the truth will be known in good time,
and this time might come a lot sooner than just about anybody thinks. Just
ask the people in Venezuela how
this works, where they wake up to ever-increasing prices every day (hyperinflation)
as central planners continue to destroy the currency in a completely hollowed
out economy now devoid of any growth.

As Ron Paul points out in his
latest, this is the path America (the West) is on as well, where he puts
the blame for our dwindling
fortunes squarely on the shoulders on the money printers, that being
the Fed and all the appendages it serves. He warns, the welfare state is
in the process of collapse, and he is right in spite of all the fraudulent
data authorities may publish to the contrary – don't kid yourself – because
these people massage
the statistics and are bold-faced liars. American families are not better
off today than they were even just a few years ago – there's no way – take
a good look around. (See here, here,
and here.)
The real economy, the one that doesn't reflect the fortunes of the top 1%
and their minions (the bubble
economy[s]), is tipping over again.

And the debt will continue
to rise. The most optimistic projections put Federal debt some $10-tillion higher
10-years from now, but this is a pipe dream, because unless central planners
can reverse the laws of physics, it will be much worse unless debt based
money is scrapped. Of course this will never happen as long as the Fed has
their way. They would rather impose increasingly draconian policy right to
the end, with the last card to play that being hyperinflation.
This will come after negative
rates, expanded QE (including
corporate debt, stock, etc.), and lastly helicopter
money. That's when people will finally get their hands on some of that
freshly printed money the bankers and their buddies have been hoarding for
themselves, which will send money
multipliers, and general price inflation, spiraling upward as its circulated
in the economy.

It's either that, or go the other way and bring in a sound
money system. But I can assure you, this will never happen voluntarily,
because all the bubbles would collapse instantaneously. No, first we get
hyperinflation as the 'powers that be' attempt to stave off such collapse,
then we get a sound money system later once economies are completely destroyed
and there is no alternative. You can see it now. The acceleration
of decentralization of Globalism is
the first sign process is now formally turned in this direction. Sure, Trump
will cut taxes next year if (when) he gets in, and this will breath some
life back into the economy temporarily, but make no mistake, the damage is already
done, and it's bigger than any policy measures at this point, making
any such measures nothing more than a band aid solution stretched over a gaping
wound. Clearly – America (and West) is in
decay – and the party is over.

You don't need look far to see it these days. From German
exports down 10% (along with their banking
problems), to Japan's
catatonic economy, to America, where the US economy has become nothing
more than a twisted
episode of the Twilight Zone, so far out in 'left field' (due to neo-liberal
rule) that if it were not for the rigged markets (everything) and political
folly to keep people distracted, it would (will?) be suicide central of the
world. As David Stockman warns however,
something we have been doing for weeks now, come election
time, and into next
year, the stimulus induced zeppelin
markets that continue to levitate higher are set to pop in conjunction
with the political cycle – the
Fed's (and Wall
Street's) penchant to place Hillary in the White House. After last week's
'jam job' in stocks little doubt can remain the status quo is worried about
Hillary's chances now given her health and credibility concerns, however
with market rates on
the rise, their loyalty could change quickly once she's out of the picture.

Thing is, the charts support such a view, as it appears while tech stocks
could certainly run higher for some time yet in an accelerating blow-off, possibly
into next year (with a Clinton win?), a top appears to be in the works right
into a possible 'seasonal inversion' with higher highs in September (and October?).
At least that's the way status quo price managers, led by the Fed, attempted
to 'paint the tape' into Friday's close in stocks. They tried to get the CBOE
Volatility Index (VIX) down on the day, but were unsuccessful. Most of the
day saw both stocks and the VIX down simultaneously, which shouts 'intervention'
on the part of status quo price managers. So who knows – the selling could
also start this coming week with a poor showing by Clinton in the debate tonight.
That's my bet. The party might finally be over for sociopath Hillary – thank
God. In looking at the monthly S&P 500 (SPX) / VIX Ratio, it appears to
be testing the 'sine fan' breakdown, poising for further losses. (See Figure
1)

Figure 1

And the chart pattern in the Dow / XAU Ratio also supports this view, seen
both attached here in
the daily, and below in the monthly. The daily shows an 'inverse head and shoulders
pattern' now fully formed that could release to the upside at any time. Of
course it could also take longer to form up if Hillary takes enough drugs Monday
to keep her looking good enough to raise the animal spirits of 'the party'
again, however my experience with such things (after taking care of sick people
in her situation) is – don't bet on it. Once somebody is as fundamentally depleted
as she is, they can hold it together for short periods of time if there's no
stress, however under 'high stress' situations, any measures taken to bolster
her energy levels will vanish quickly. Apparently the debate
rules will give Hillary no way to hide her true condition if it appears
within the 90- minutes, which might as well be 90-days to her. If this assessment
proves accurate, then stocks, bonds, and the rest of the bubbles could tumble
this week as Trump's prospects for the White House are solidified. (See Figure
2)

Figure 2

Again, that's the message in Figure 2. It needs to retrace higher given the
oversold condition in several key indicators as the result of a record crash
this year. It's still at recent lows essentially. A turn higher is a 'deflation
signal' as money rushes out of the 'inflation trade'. What does this mean for
precious metal stocks? Are they part of the bubble complex and inflation trade?
Answer: Yes and no. Gold stocks are definitely part of the inflation trade.
In fact they lead it. But if their respective commodity prices could rise (if
the neo-liberal establishment did not attempt to manage their prices lower),
they would not have any 'air' in their prices at current levels. In the big
picture, the current situation is more akin to the year 2000's bubble top in
the NASDAQ than any other time, with sentiment chief amongst them (that's what
you get with neo-liberal democrat with New World Order (NOW) aspirations running
the country for 8-years – too many people living in La La Land – no offence
to the new movie). It's the deleveraging that takes everything down in tandem
until central authorities announce measures to re-inflate the balloons. (See
Figure 3)

Figure 3

So, with margin debt levels never
higher, as was the case in 2000, the deleveraging process could come
'fast and furious' under the right conditions, which are in fact present
as we speak. All we need is the pin to prick the bubbles and it could be
all over but the crying by Christmas (sooner?), which again, makes Hillary's
performance Monday, and how 'the party' deals with it, critically important.
One foul up – one mistake – and the dominos could start falling. The real
economy has never been more hollowed out, and never more fragile. (See here, here,
and here.)
And this could spill over into the trade at the wrong time, like four-weeks
from the next ETF options expiry, meaning a minimum of algo related support
exists for stocks at the moment. It's important to realize this is normally
time in the monthly options cycle when the price managers watch their P's
and Q's as to not unset the apple cart because of this, especially with futures
markets so
vulnerable.

This makes what happens to night very important indeed, because the circumstances
could spin out of control quickly. Word is, if Hillary duffs tonight she's
getting the boot. And it doesn't look good for Hillary based on the defections and
(deserved) disrespect that
keeps piling on at the moment. She will need to summon all her powers tonight
if she's to pull another rabbit out of wherever. Again, with any luck, we will
be rid of the Clinton's and their ilk after tonight. The Dems will be frantic
to replace her, but it will be too
late for them as well. It will be a long time before anybody with at least
a sense of proper morality trusts those clowns again. For what it's worth,
The Donald isn't going to have an easy time of it in the White House given
present circumstances, not the least of concerns being a hostile Fed (that
may need to go), which raises the specter of 'the death of the two-party system'
in America, especially with Millennials on the rise.

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